Between 1990 and 2000, Myanmar garment industry imported mainly to the US, which bought over half of Myanmar’s garments, followed by the European Union (EU). Starting from 2003, the US government started posing sanction through the Burmese Freedom and Democracy Act that prohibited US firms from buying products made in Myanmar. Since then the number of garment factory workers fell from around 135,000 at its peak in 2001, to around 51,000 in 2005. Japan has become the biggest importer of Myanmar garments and South Korea was importing 25% of made-in-Myanmar garments. The industry revived to employ around 72,000 workers in 2010.
The garment industry in Myanmar is still small compared to major producers such as China and Bangladesh, but it is growing exponentially. In October 2016, the Ministry of Commerce announced that the garment export reached $745.49 million, a triple growth compared to $232.81 million for August 2015.These figures are a result of the lifting of sanctions from the EU and granting of GSP from the EU.
Many international brands such as Gap Inc, H&M, Topshop, Marks and Spencer, Tesco and Primark are now sourcing from Myanmar. It is estimated that there are now around 35013 garment factories in Myanmar, employing around 240,000 people, over 90% of whom are female. Despite an increase in jobs, labor standards remain low and 88% of the workers work 10 hours plus per day and 95% of the workers work 6 days regularly per week.
The Myanmar Garment Manufacturers Association is aiming to increase the export value of garments made in Myanmar from $912 million in 2012 to $8-10 billion in 2024, and to increase employment from around 240,000 to 1.5 million workers. In order to accelerate the growth, the garment industry needs to change from Cut-Make- Pack (CMP) to Freight on Board (FOB), and ultimately Own Design Manufacture (ODM)/Own Brand Manufacturing (OBM).
Myanmar garment industry is also having pressures from the global markets. Factory owners need to make profits and extract as much labor from their workers as possible. There is a pressing need to produce as cheaply and as quickly as possible. Factory owners also put these stresses onto the management and then management onto their workers. This means forcing workers to do overtime, or threatening them with dismissal if they take a day off.
Moreover, unreliable and expensive electricity, the lack of a deep-sea port and poor rail and road connections are other problems for industry development in Myanmar. The lack of compliance with international labor standards is also an impediment to industry growth, and the waves of strikes seen at garment factories attests to this.
The most relevant law is the amended labor law and other than that the Myanmar Garment Manufacturers Association has published the country’s first ever Code of Conduct aiming to set out responsible and ethical business practices for the growing apparel industry. Around 300 members garment companies represent MGMA. The Code includes International Labor Organization Core Conventions combined with the structures of Myanmar’s own laws.
TVP Group is a local firm that provides highest standard financial advisory services to both Myanmar companies and MNCs. With our diverse corporate network, we support our clients on group structuring, valuation, M&A, Joint Venture structuring and research, while offering a fair pricing.
2018 Trust Venture Partners Co., Ltd. All Rights Reserved.